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  • Mike Paterson

Jury still out

Wednesday 20 October 2021

Mixed USD sentiment in the past 24 hours but we've seen some demand return with the main recent trend of weaker JPY prevailing still. Some CHF supply too again as USDCHF holds 0.9200 with the SNB ever vigilant. Markets continue to second-guess CBs on interest rate hikes with the BOE leading the way in November being factored in to support the Pound still.

Equities and oil remain underpinned overall along with yields but off their highs again as European trading gets underway. UK CPI data came in below expectations but still underpinned as we would expect in these current times and bets still favouring a BOE November hike of 0.15% but I remain unconvinced.

For FX markets focus on the price action and decide what presents value or doesn't, and if in doubt, keep out. Be aware of those rising support lines and/or falling resistance levels. Forex is not rocket science but it is ever-fickle so you have to stay in control of you/your trades as much as you can.

GBPUSD: The rally continued yesterday breaking up through food offers and T/A resistance at 1.3800-05 using the softer USD and GBPJPY demand to post fresh recent highs of 1.3834 before capping and since retreating to test 1.3770 so far. I remain a rally seller overall (BOE could easily disappoint) but still respecting the ongoing dip demand while keeping an eye on EURGBP and GBPJPY as always. EURGBP: Rally duly dailed at 0.8460 but still holding 0.8415-20 where we also have decent option expiries today but failing to hold gains back through 0.8440 as I type. GBPJPY: Good support now at 157.30-50 as JPY supply continues but capping this time at 158.20 as GBPUSD retreats. Still respecting current market dip demand on this and core pairs.

I remain a GBP rally seller across the pairs overall as my preferred trading side albeit against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: The rally through key 1.1650 resistance was short lived and now retreating amid the firmer USD/softer risk tones but still in the middle of cross-flow action.USDJPY: Still underpinned amid the ongoing JPY supply generally and finding good support at 114.00 again helped by the firmer USD tones after yesterday's test but failing at 114.70 so far. EURJPY: Support line in the sand now at 132.90-00 amid the general JPY supply but 133.50 sellers prevailing this morning so far. USDCHF: Those old lines at 0.9200 did break briefly but now back looking at 0.9250 amid the general USD demand as EURUSD rereats and EURCHF still above 1.0700 (hello SNB again?) but rallies still limited by the ongoing CHFJPY demand. EURCHF: 1.0720 support now with SNB shadow ever present but failing at 1.0760 as EURUSD retreats.

AUDUSD: Now with a support line at 0.7460 after breaching 0.7480 then 0.7500 on the AUDJPY demand with Gold/metals price support in the mix too. USDCAD: 1.2330 holding the latest retreat helped by firmer USD tones but failing at 1.2360 amid the ongoing CADJPY demand. Some decent option interest today at 1.2300 potentially in play

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 09.10 BST

GBPUSD 1.3781

EURUSD 1.1628

EURGBP 0.8436

GBPEUR 1.1852

GBPJPY 157.65

GBPCAD 1.7004

GBPZAR 19.9470

GBPHKD 10.7346

USDJPY 114.39

EURJPY 133.00

EURCHF 1.0747

EURHKD 9.0572

AUDUSD 0.7493

USDCAD 1.2346

USDCHF 0.9242

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